Hackett in the News – 2009

November 23, 2009

Coverage, in German, of REL's DACH region working capital analysis. Infineon executives are also quoted, and working capital performance by about a dozen DACH companies, including Volkswagon, Man, Beiersdorf, BASF, and Alcon, is highlighted.

November 19, 2009

As companies move beyond rationalizing their supply base to driving savings from strategic sourcing, strategic supplier management becomes more important. This is particularly true in direct spend, where strategic suppliers and core spend directly influence overall firm performance. New research from The Hackett Group shows that world-class organizations outperform their peers in managing their direct spend, devoting about four times more FTE days per major supplier per year than the peer group.

November 17, 2009

A new IT jobs report points to shifting employment prospects. While demand for business analysts, technology architects, and SAP configuration specialists lis looking up -- especially in the healthcare and green energy sectors -- lower level "commodity" IT jobs will continue to be eliminated or outsourced.

In 2009, about 630,000 back-office jobs -- including about 300,000 IT jobs -- were eliminated from the payrolls of 4,000 global, publicly traded companies with more than $1 billion revenue, according to a new report from research firm Hackett Group.

November 11, 2009

Top executives and traders at some banks are expected to receive huge bonuses this year. But in the banks' back offices, many other workers face layoffs, outsourcing, and reduced pay. Studies point to a jobless recovery for the entire IT, finance, procurement, and human resources sectors across all industries, according to the Hackett Group, a Miami-based strategic advisory firm. Nearly 1.4 million such jobs will have been lost from the largest companies in Europe and North America between 2008 and 2010, Hackett's research shows.

October 27, 2009

Large companies are getting more comfortable with using shared-services centers and are considering whether to move more finance transactions into the organizations, which can be run in-house or by a service provider. According to the consultancy The Hackett Group, a longtime proponent of the shared-services model, 93% of the largest 1,000 companies by revenue worldwide are using SSCs for at least some functions. And more than three-fourths of 200 companies surveyed by Hackett use them to handle some of the more mundane finance processes, such as accounts payable, accounting for fixed assets, and processing travel and expenses.

October 16, 2009

This Hackett research examines the percent of companies that handle at least some of their finance processes in a shared services/Global Business Services organization. The analysis illustrates the evolution underway as shared services are evolving into Global Business Services organizations.

October 1, 2009

The global recession has uncovered a very sobering reality for Global 1000 companies: Few are agile enough to be able to reduce Selling, General & Administrative (SG&A) costs quickly enough to avoid becoming a drag on profits. Indeed, in Q1-2009 and Q2-2009, Global 1000 companies saw their revenues decline far faster than their SG&A costs. The difference between declines in revenue and declines in SG&A costs is called the agility gap.

Recent discussions with senior executives from The Hackett Group's Global 1000 client base revealed three main insights about what has become the "new normal." First, even after the economic recovery begins to take hold, companies will continue to seek back-office cost reductions in ways that don't require major capital outlays. Second, companies are taking action now-they are neither waiting for the recovery to occur, nor are they pegging their plans to the expected extent of the recovery. Finally, back-office functions such as finance and accounting (F&A) will be tasked with delivering improved levels of quality and service with much lower cost structures.

August 31, 2009

Large corporations are tightening the screws on their smaller counterparts as the credit crunch intensifies companies' efforts to hold on to their cash. In an example of corporate Darwinism at work, the recent round of quarterly earnings results showed companies with annual revenue of more than $5 billion sped up their collection of cash from customers while slowing their own payments to suppliers.

Firms with less than $500 million in annual sales, on the other hand, generally took longer to collect cash and paid their bills faster than in the same period a year ago, according to an analysis conducted for The Wall Street Journal by REL, the working-capital division of global strategic advisory firm The Hackett Group.

August 26, 2009

The world's largest companies have for the most part failed in their efforts to reduce the cost of functions such as Finance, IT, HR and Procurement over the past year, exacerbating the impact of dramatic declines in revenue, profits and earnings, according to new research from The Hackett Group.

July 31, 2009

Lower costs, better results. There's the four word outsourcers' mantra and, inevitably, what this means in tough times is companies are on the prowl for more, for less money, from their outsourcing partners. And that just may mean new geographies emerging as prime locations.

According to The Hackett Group Chief Research Officer Michel Janssen: "India is a proven player" and a sad lesson learned in outsourcing 1.0 was that the lowest priced deal wasn't always the best. As outsourcing 2.0 matures, said Janssen, companies recognize that bidders low balling India still might not be better. Not when work quality, dependability, and the rest of the criteria get factored in. With other locations there are risks involved."

July 17, 2009

In case you missed your morning coffee, here's an eye opener. Four out of five of the world's largest companies are unable to accurately forecast mid-term cash flow, according to a new study from The Hackett Group, Inc. and the National Association of Corporate Treasurers.

And today at least some of these corporations are turning to IT for help with these projections, Hackett Chief Research Officer Michel Janssen told CIOZone. "They're leveraging technology to create information that is highly reliable and readily available."

July 27, 2009

It's an unfortunate double whammy: Cash flow at many companies has both declined and become more difficult to forecast. Recent research from Hackett Group and the National Association of Corporate Treasurers found that just over one in five companies is able to develop a forecast of cash flow two to three months out that's accurate to within five percent.

July 7, 2009

Cash is desperately needed today, but hard to come by. Yet the biggest companies in the UK could be sitting on a potential cash resource of up to £127bn, an average of almost £500m each, according to new research from Hackett/REL. The cash is tied up on working capital - receivables, inventory, and payables.

July 7, 2009

The brutal recession has made it increasingly difficult for corporate executives to forecast cash flow, a problem that could contribute to a surge in bankruptcies in the face of weak credit markets. About 80 percent of the 1,000 largest global companies are unable to forecast cash flow over the next quarter within a 5 percent range of their actual performance, according to a study by The Hackett Group Inc and it's REL Working Capital unit.

June 26, 2009

It's the lifeblood of the business, the fuel for the corporate machine: money. And it's O2C's job to secure it and pipe it in, as smoothly and efficiently as possible. Choke up here and you're depriving your organization of critical energy at the worst possible time; get all channels running fluently, however, and without obstruction, and you'll be driving the business forwards on injections of high-octane cash. REL Senior Director Brian Shanahan contributed insights on managing credit risk, payment terms, and other issues to this article.

June 1, 2009

Plato called necessity the mother of invention. It may also be the mother of collection. Squeezed by a slowing economy and nearly frozen credit markets, U.S. companies showed themselves surprisingly adept last year at freeing cash from the one remaining source at hand: their balance sheets. Ramping up collection efforts and paring down inventories, the 1,000 largest companies slashed days working capital (DWC) in 2008 by 6.4% - the best improvement on that front in at least five years, reports consulting firm REL, the Hackett Group division that compiled this 12th annual edition of the CFO/REL Working Capital Scorecard. The result: a total of $62.7 billion liberated from working capital.

May 28, 2009

As the U.S. recession deepened late last year, it took 9 percent longer for businesses to collect money they were owed as customers held onto their cash, according to new research from REL, the working capital division of The Hackett Group. That presented corporate America with a conundrum: Each company's desire to protect its own balance sheet by holding out on paying bills caused ripples of pain through the economy as other companies made the same decision. The 1,000 largest U.S. companies took an average of 39.7 days to collect on sales in the fourth quarter, up from 36.4 days a year earlier, according to the REL data.

May 11, 2009

Doing more with less has IT looking for the best ways to close the gap between increasing demands for its services (up by 17 percent in the next two years) and a stable (if not declining) budget. The answer, The Hackett Group says, is to improve efficiency and productivity. The company studied practices and results of more than 80 global companies and describes best practices in three key areas: "IT cost control strategies, demand management, and discretionary cuts."

May 1, 2009

There is nothing like a recession to demonstrate the efficacy of shared services as a delivery model for human resources (HR) administrative processes. Organizations experienced with HR shared services find the model efficiently handles day-to-day administrative transactions, including delicate issues such as the paperwork aspects of layoffs, thus freeing staff to focus on the myriad morale and other talent-related issues caused by economic downturn.

April 30, 2009

"Cash Clinic" is a new video series dedicated to helping senior finance executives explore leading-edge cash management strategies. These programs will focus on the key concerns of finance chiefs when it comes to ensuring that cash remains king at their companies. From working capital management to banking relationships to budgeting and forecasting, the series will address all aspects of cash management best practice via panel debates and case studies.

April 27, 2009

Call it the CIO's dilemma: As IT leaders cut budgets in response to rising economic pressures, some find they must also deal with a spike in demand for IT services by their end users. CIOs at top-performing companies are dealing with this issue in part by making quick and deep discretionary cuts across the board rather than through better IT cost-control initiatives, according to a new survey by The Hackett Group.

April 15, 2009

This metric addresses the degree to which enterprise supply risk management processes and supporting programs are implemented across the organization. There is perhaps no activity more important to procurement than ensuring high-quality supply at lowest total cost from reputable suppliers. Yet, as foundational as supply risk management is to the enterprise, it is surprisingly under-resourced and managed in an ad hoc manner.

While there may be pockets of supply risk management activities that are distributed among the various processes and parts of the business, only 13% of peer-group companies utilize supply risk management processes consistently across the business.

April 1, 2009

Few metrics signal looming danger more sharply than a declining current ratio, yet many industries began the year with current assets outpacing current liabilities by a narrow margin. Seven sectors saw current ratios stumble in 2008, according to REL Consultancy, which compiled the data. Worst hit were independent power producers and energy traders, which suffered a notable 36 percent decline in their aggregate current ratio, to 1.4.

February 19, 2009

Working capital optimization has always been the least expensive and most readily available form of cash. With tightening credit markets the option of liberating cash from a company's operational processes has moved to the forefront. Inventory optimization presents the second-largest opportunity among the working capital components after trade receivables and ahead of trade payables. This analyst insight from Henri vander Eerden offers REL's guidance on how companies can benefit from optimising inventory performance.

February 1, 2009

The Shared Services and Outsourcing Network (SSON) recently interviewed Penny Weller, Senior Director and Program Lead for Shared Services at The Hackett Group (www.thehackettgroup.com), an advisory, benchmarking and transformation consulting services firm focusing on best practices in finance, IT, procurement, HR, and other back-office areas. Following are excerpts from that interview.

January 1, 2009

It isn't surprising that, when it comes to being an effective global human resource organization, moving from dysfunctional to dynamic requires some basic "best practices" strategies.

What is somewhat surprising, however, is that a recent study by The Hackett Group reveals a "perception gap" among "lower-performing" HR organizations (ones with much less effective global HR policies and results). In short, the HR organizations having problems on the global front simply don't realize how important globalization's impact is on their business in the first place. On the flip side, successful global HR operations clearly understand globalization's impact on the business, and have responded quickly to meet those challenges.